David Sangree weighed in on Great Wolf Lodge’s newest indoor waterpark resort in Garden Grove, California in a Voice of OC article. The $250 million resort includes a 603-room hotel and a 105,000-square foot indoor waterpark. Congratulations to our client, Great Wolf Resorts, on another great achievement!
Published by: The Voice of OC/Thy Vo
Published date: February 2016
The Great Wolf Lodge Waterpark Hotel in Garden Grove opens this week after more than a decade of planning by city officials, who hope the Wisconsin-based chain resort will draw Disneyland Resort visitors out of nearby Anaheim and into Garden Grove.
It is arguably the city’s biggest bet ever, with $100 million in public funds going toward a $250 million resort that includes a 603-room hotel with a 105,000-square foot indoor waterpark, the first of its kind in Southern California.
If it’s successful, officials say the waterpark hotel will more than pay for itself over the next decade, by bringing in more than $8 million in tax revenue a year and creating 700 new jobs.
And that revenue would be crucial to Garden Grove, which is banking on the success of the resort to help pull the city out of the ongoing budget crisis it has been experiencing since Gov. Jerry Brown ended redevelopment in 2011.
“When the hotel is fully operational it will bring in millions to the general fund to help maintain and expand city services to citizens,” said city councilman Kris Beard. “So, it’s fair to say the anticipated success of this project will be a long term ‘win-win’ for the community and the Great Wolf Lodge.”
Some residents, meanwhile, have questioned whether the benefits of the millions spent subsidizing the hotel will trickle back down to taxpayers for citywide services and improvements.
As part of the city’s deal with Great Wolf Resorts and developer McWhinney Enterprises, the city’s redevelopment agency swallowed the $20.8 million cost of acquiring and preparing 10.3 acres of property for the Waterpark Hotel, then transferring it to the developer at no cost.
They later paid at least $1.9 million to settle the cost of relocating 30 low-income families living in a trailer park on the property into affordable housing, not including the cost of legal fees for the five-year court battle over the relocation payments.
The developer also received a $47 million lump sum from city redevelopment funds, $5 million of which was paid after the completion of the parking structure and the remaining $42 million to be paid 30 days after the resort opens for business.
Interest payments on the 20-year bond financing that lump sum will likely add another $23 million to the total, said city finance director Kingsley Okereke. Annually, the redevelopment agency will pay an average of $3.2 million in debt service payments on those bonds.
The city was also required to make $5.2 million in improvements to the sidewalk and streets around the property as part of their agreement.
The development agreement also includes the possibility of a 200-room expansion to the hotel, which would include a 10-year, 50 percent tax rebate on bed taxes and another 12-year, 50 percent tax rebate on sales and property tax for the expanded portion of the hotel.
A Controversial Topic
The subsidy package in itself is not unusual — cities routinely use generous tax subsidies to build stadiums, convention centers and other tourism magnets. It’s a smaller subsidy compared to a controversial $158-million subsidy the city of Anaheim gave to a luxury hotel developer a few years back.
But there are plenty of critics of subsidy strategies who say that any public money spent on subsidies for private projects could always be going somewhere else, such as road or neighborhood improvements.
And Garden Grove is certainly taking a chance by betting so much on an indoor waterpark in Southern California.
David Sangree, a hotel and waterpark consultant and president of the consulting firm Hotel and Leisure Advisors, said the subsidy from Garden Grove is among the largest public subsidies for a waterpark resort of this type in the country.
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